For port cities, slowdown in global trade hits home

Wheeled minicranes and bulked-up forklifts weave among the forest of steel boxes, arranging neat stacks of inbound and outbound cargo. This is where the anonymous daily labor that greases the wheels of globalization occurs.

From the mid-18th century, when English settlers began shipping cattle and cotton to Europe, trade has been an essential part of Savannah's economy. In the modern era, it's only since the mid-1990s that the local port has really flourished.

In 1995, the year Texas native Marchand took the helm, the port handled a total of 626,151 containers. At the time, Savannah exported much more than it imported, which meant that potential exporters had to bring empty shipping containers from the Northeast to handle their loads. Often, that was too costly given the relatively low value of the shipments of kaolin clay or paper that were the region's key exports.

So Marchand set out to attract higher import volumes, figuring that containers that came in full of clothes or electronics could be reloaded with clay, paper or wood pulp and sent back across the oceans.

By 2002, thanks to a marketing push that persuaded major retailers such as Wal-Mart and Home Depot to locate regional distribution centers nearby, the port's cargo volume more than doubled. Six years later, amid a national shopping spree fueled by consumer credit, it had doubled again to more than 2.6 million containers.

That earned Savannah billing as the nation's fourth-busiest port and No. 2 on the East Coast, behind only New York.

"Every time they announced the port activity figure, it was record-setting. ... They developed a strategic vision for the port that appears to have played out pretty well," said Michael Toma, director of the Center for Regional Analysis at Armstrong Atlantic State University.

The benefits were felt across the region: More than 286,000 jobs, 7% of total state employment, are linked to port activity.

A chill in global trade

Now, the global financial crisis has thrown into reverse an almost two-decades-long process of globalization that seemingly spread prosperity to suburban American homeowners and Third World factory workers alike.

Trade is suffering a double whammy: The recession is depressing U.S. demand for goods made abroad as well as foreigners' desire to buy American products, while the credit crunch chokes off the routine finance that facilitates the movement of goods from one place to another.

In Savannah, trade flows began wavering last spring, but the monthly declines were minor until the Lehman Bros. bankruptcy in mid-September convulsed global markets. In December, monthly shipments fell more than 9% compared with the same month in 2007. January was even worse, down 16%, and February's nearly 22% drop indicated the global financial hurricane is intensifying.

"We feel it immediately," Marchand says. "You can see the numbers of trucks at the gates that you're handling in and out every day. You can see the number of rail boxes you've got going in and out or the number of lifts on and off the vessels."

As the global economy sank deeper into recession last fall, trade channels seized up. At Gulfstream Aerospace, long one of the pillars of the region's manufacturing industry, overseas orders for the company's corporate jets began evaporating.

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